Electronic settlement of petroleum and gas distributions

ABSTRACT

In one embodiment, a system can include a centralized storage module, for example a database, that stores data relating to petroleum, natural gas and other related products taken from several different sources and entities. The entity storing and maintaining this data can be an entity independent from the operators, producers and/or other working interests. This system can use automated techniques to reconcile distributions to all entities associated with a well due to the removal of a mineral, for example, petroleum, natural gas and/or other related products, from that well, on a periodic basis. These automated techniques include, for example, reconciling all agreements associated with the well, reconciling the amount of mineral removed at the well, reconciling the spot market price associated with the well at the time of removal, automating approval by the removing entity, automating payment and the like.

CLAIM OF PRIORITY

This application is a continuation of U.S. patent application Ser. No.10/465,296, filed Jun. 19, 2003, which claims the benefit of U.S.Provisional Application Ser. No. 60/389,822, filed on Jun. 19, 2002, theentire contents of all of the priority applications are herebyincorporated by reference.

TECHNICAL FIELD

The invention relates to electronic settlement, and more particularlyelectronic settlement of petroleum and gas distributions.

BACKGROUND

The removal of a mineral such as oil or natural gas from a well involvessettlement among multiple ownership interests (e.g. the producer,royalty owners, joint venturers). Determination of settlements for anyof the multiple owners that are owed portions of the extracted mineralsmay involve determining prices and quantities associated with a mineralflow. In the past, distribution of the mineral was generally controlledby one large entity. This entity had knowledge of the mineral flow,including prices and quantities and thus could readily determinesettlements for any of the multiple owners that were owed portions ofthe extracted minerals. Since the advent of deregulation, thedistribution chain of the mineral has been broken up and controlled byseveral different entities, resulting in different entities having theirown controls and procedures. In addition, different ownership interestsand distribution entities may have different price realization points.This has led to the multiple owners receiving inconsistent settlementpayments from the different entities.

SUMMARY

This description includes methods and systems to centralize data frommultiple sources and automate the process of settlement determinationand distribution to arrive at consistent settlement distributions. Ingeneral, in one aspect there is a method for determining a priceassociated with a well. The method includes receiving global price data,receiving local cost data, determining a correspondence between theglobal price data and the well, and determining a local price associatedwith the well using the global price data, the local cost data and thedetermined correspondence. Other examples can include one or more of thefollowing features. The global price data can include price data frommarket centers. The correspondence can include a statistical pattern offlow of a mineral from the well to each of the market centers. The localcost data can include respective transportation costs from the well toeach of the market centers. The global price data can include apublished price from a New York mercantile exchange, an index price, oran actual sell price from an independent entity. The local cost data caninclude gathering costs, transportation costs, values of shrinkage orprevailing transportation and gathering routes. Determining a localprice can be performed automatically on a periodic basis.

The method can include determining a monetary value using a techniquecomprising a fair market value technique, a gross proceeds technique, ahighest price in an area technique, a most favored nation technique, amajor portions technique or a technique compliant to a governmentregulation or a contract term. The method can include selectingmonitoring points providing the global data, each monitoring pointproviding a respective price per quantity of the mineral and at leastone monitoring point corresponding to an independent entity. In someexamples, no single entity controls the global price data. The methodcan include generating an estimated probability density functionassociated with the local price.

In general, in another aspect, there is a method for automaticallydetermining settlement rights and obligations associated with a well.The method includes storing data associated with a set of documents, thedata comprising summaries of rights and obligations associated with theset of documents and geospatial data associated with the set ofdocuments, and automatically determining settlement rights andobligations associated with a well based on the summaries of rights andobligations and at least a partial intersection of the geospatial datawith a geospatial description of the well.

Other examples can include one or more of the following features. Themethod can include automatically determining settlement rights andobligations is performed periodically. The method can includeautomatically determining whether a conflict exists between any of thesummaries of rights and obligations and, if a conflict is determined toexist, automatically resolving the conflict based on a heuristicprocess. Automatically determining whether a conflict exists can beperformed on a periodic basis. The method can include generating analert upon the occurrence of a predefined event. A document in the setof documents can include a contract, a lease, a will, or an agreement.

In general, in another aspect, there is a method for settling adistribution to entities due to the removal of a mineral from its originby an operator. The method includes automatically determining arespective quantity of mineral to be distributed to each of theentities, receiving from one or more of the entities over a computernetwork an election to sell their respective portion, and aggregatingeach of the respective portions of the one or more of the entitiesthereby generating a collective portion of the mineral. Other examplescan include one or more of the following features. The mineral caninclude petroleum, natural gas or other related products. The otherrelated products can include natural gas liquids, CO2, helium, sulfur,or coal bed methane. The method can include selling the collectiveportion of the mineral through an independent marketing program. Themethod can include determining the respective monetary value for eachrespective portion based at least in part on a sell price of thecollective portion.

In general, in another aspect, there is a method for automaticallyreconciling volume data to ascertain a quantity of mineral associatedwith a well. The method includes receiving volume data from sources,balancing the respective volume data from a first source with the othervolume data from the other sources, and automatically determining aquantity of mineral based at least in part on the balanced volume data.The method can also include using a liquid, gas and solid balancingtechnique or a mass and heating balancing technique.

In general, in another aspect, there is a method for settling adistribution to a first entity due to the removal of a mineral from itsorigin by a second entity. The method includes transmitting to thesecond entity a message associated with a settlement, displaying to thesecond entity a monetary value to be distributed to the first entity dueto the removal of the mineral, and allowing the second entity to approvethe monetary value over a computer network. Other examples can includeone or more of the following features. The mineral can includepetroleum, natural gas or other related products. The other relatedproducts can include natural gas liquids, CO2, helium, sulfur, or coalbed methane. The method can include providing a centralized call center.The method can include displaying a settlement statement providing oneor more links to supporting data. The supporting data can include aschematic diagram, a map, an electronic representation of a document, aprice graph or a volume graph. The method can include, if the secondentity approves the displayed settlement statement without changes,indemnifying the second entity against any liability to the firstentity. The method can include, if the second entity approves thedisplayed settlement statement without changes, electronicallytransferring the monetary value to an account associated with the firstentity.

In general, in another aspect, there is a method for generatingsettlements. The method includes storing in a storage module quantitydata associated with a mineral, storing in the storage module price dataassociated with the mineral from sources including an independentsource, storing in the storage module data associated with rights andobligations, reconciling by the storage module any inconsistencies ofthe quantity data, price data or data associated with rights andobligations, and generating by the storage module a settlement using thequantity data, price data and data associated with rights andobligations. The mineral can include petroleum, natural gas or otherrelated products. The other related products include natural gasliquids, CO2, helium, sulfur, or coal bed methane.

In general, in another aspect, there is a method for settling adistribution to a first entity due to the removal of a mineral from itsorigin by a second entity. The method includes automatically determininga monetary value associated with a portion of the removed mineral to bedistributed to the first entity from the second entity using storedquantity data, stored price data and stored data associated with rightsand obligations, and upon approval by the second entity of the monetaryvalue to be distributed to the first entity, electronically transferringthe portion of the monetary value to an account associated with thefirst entity. Other examples can include one or more of the followingfeatures. The mineral can include petroleum, natural gas or otherrelated products. The other related products can include natural gasliquids, CO2, helium, sulfur, or coal bed methane.

The method can include receiving a quantity value corresponding to anamount of the mineral removed from its origin by the second entity overa predetermined time interval, and determining a portion of the quantityvalue to be distributed to the first entity. The method can includedetermining measuring points, each measuring point providing data tocalculate a respective quantity of the mineral over the predeterminedtime interval, and determining an amount of the mineral removed from itsorigin by the second entity over the predetermined time interval usingeach respective quantity. The method can include comparing eachrespective quantity with each other respective quantity, and reconcilingany differences to arrive at a calculated quantity that is accurate tostatistical degree of certainty. The can include calculating therespective quantity by determining a portion of a total quantity of themineral at the measuring point that is caused by the second entityremoving the mineral from its origin.

The method can include determining a monetary value using a techniquecomprising a fair market value technique, a gross proceeds technique, ahighest price in an area technique, a most favored nation technique, amajor portions technique or a technique compliant to a governmentregulation or a contract term. The method can include determiningmonitoring points, each monitoring point providing a respective priceper quantity of the mineral and at least one monitoring pointcorresponding to a third entity, wherein determining a monetary valuefurther comprises determining a monetary value associated with a portionof the removed mineral using the respective prices per quantity. Themethod can include selecting a quantity of monitoring points such thatno single entity controls the determined monetary value. The methodmonitoring points can include a published price from a New Yorkmercantile exchange, an index price or an actual sell price from thethird entity.

The method can include receiving data including one or more parametersdefining a relationship between the first and second entities, whereinthe stored data associated with rights and obligations comprises the oneor more parameters. One or more parameters can be associated with atleast one of a royalty rate, a lease term, a farm-out term, a taxregulation. The method can include displaying a settlement statement tothe second entity including the monetary value to be distributed to thefirst entity. The method can include displaying an amount of the mineralremoved, providing a hyperlink to the quantity data used in determiningthe amount of the mineral removed, and displaying the determinedmonetary value to be distributed to the first entity. The method caninclude providing a hyperlink to the price data used in determining themonetary value to be distributed to the first entity; and providing agraphical user interface that allows the second entity to accept orchange each of the displayed items.

The method can include, if the second entity accepts all of thedisplayed items without changes, indemnifying the second entity againstany liability to the first entity. The method can include establishingthe account on behalf of the first entity. Automatically determining amonetary value can be performed independently of the first entity andthe second entity.

In general, in another aspect, there is a system for settling adistribution to a first entity due to the removal of a mineral from awell that includes a valuation module. The valuation module can beconfigured to receive settlement rights and obligations associated withthe well, to receive quantity data associated with a portion of theremoved mineral, to receive price data associated with the mineral, andto determine a monetary value associated with the portion of the removedmineral, based on the quantity data and the price data. Other examplescan include one or more of the following features. The mineral caninclude petroleum, natural gas or other related products. The otherrelated products can include natural gas liquids, CO2, helium, sulfur,or coal bed methane.

The system can include a document management module configured toprovide to the valuation module the settlement rights and obligationsassociated with the well, based on geospatial data associated with thesettlement rights and obligations and at least a partial intersection ofthe geospatial data with a geospatial description of the well. Thesystem can include a volume capture and confirmation module configuredto provide to the valuation module the quantity data associated with aportion of the removed mineral, based on determining an amount of themineral removed from the well over a predetermined time interval. Thesystem can include a market monitoring module configured to provide tothe valuation module the price data associated with the mineral, whereinat least one source of the price data is an entity independent of anyparty or entity having the settlement rights and obligations. The systemcan include a billing and transaction clearing module configured totransfer a portion of the monetary value associated with the portion ofthe removed mineral to an account associated with the first entity,based on the settlement rights and obligations. The party or entityhaving the settlement rights and obligations can be enabled to view themonetary value associated with the portion of the removed mineral via anetwork.

In general, in another aspect, there is an article of manufacture havingcomputer-readable program portions embodied therein, the articlecomprising instructions for causing a processor to perform each of theparts of one or more of the above-described methods.

Other features and advantages of the invention will be apparent from thedescription of the preferred embodiments thereof and from the claims.

DESCRIPTION OF DRAWINGS

FIG. 1 is a diagram showing an electronic settlement system and itsrelationship to various data, documents, and parties.

FIG. 2 is a block diagram showing modules of an electronic settlementsystem.

FIG. 3 is a flowchart of a process performed by a document managementmodule.

FIG. 4 is a flowchart of a process performed by a valuation module.

FIG. 5 is a diagram showing an example of an electronic settlementsystem being used to determine settlements from a company to a royaltyowner.

DETAILED DESCRIPTION

FIG. 1 is a diagram showing an electronic settlement system 100 and itsrelationship to various data, documents, and parties involved in thesettlement process. The settlement system 100 is summarized here anddescribed in more detail below. In general settlement system 100captures, stores, and maintains documents and data from various sourcesfor use in determination of settlements. A settlement typically includeswhat parties owe what other parties royalties or other payments, in cashor in kind, for the extraction of oil, natural gas, and related products(generally referred to herein as minerals) from a well 112.

System 100 receives documents 102, such as leases, contracts, andagreements that govern the ownership in, and the rights and obligationsto the mineral extracted from well 112. System 100 stores the documents102 and/or data from the documents 102 and automatically determinesthose documents that are associated with well 112. Using the documentsassociated with well 112, system 100 can determine precise rights andobligations of the parties associated with the well to determine anaccurate settlement. When they exist, system 100 also identifies andautomatically resolves conflicts between two or more documents to arriveat an accurate settlement.

System 100 also captures data reflecting the volume of mineralsextracted, using various measuring points. For example, system 100stores a reading from a meter 104, which measures the mineral leavingwell 112 and flowing into a facility 105 to prepare for transporting. Inanother illustrated example, system 100 also captures data reflectingthe volume of minerals that are transported, by using a quantity listedin a document 106, for example an invoice or sales receipt prepared byfacility 105 or a transporter 109. System 100 can also capture volumedata from the recipient (not shown) of transporter 109. The recipienthas his own measurement for the volume of mineral for which he takescustody. The data from the recipient may also be from an invoice orsales receipt, or the data may be from a meter attached directly to theinlet pipe of the recipient's storage tank. With volume data coming fromthese various measuring points controlled by different entities, it canbe seen that the volumes can differ. To prepare an accurate settlement,system 100 automatically reconciles the volume data periodically.

System 100 also monitors price data using various monitoring pointscontrolled by different entities. The price data includes prices atwhich minerals are sold and costs related to the gathering, processing,storage, transportation, and sale of the mineral at many differentgeographical locations. The monitoring points and/or data can be inseveral different forms. For example, the price data can come from atransportation billing document 108 associated with the transporter 109.Billing document 108 reflects costs associated with transportingminerals from facility 105 to a particular recipient and/or marketcenter. In another illustrated example, the pricing data also comes froma ticker 110, which represents a real-time feed of market price dataassociated with the mineral from a particular market (e.g., New YorkMercantile Exchange) in which the mineral is traded. System 100 analyzesand uses this price data to determine an estimated value for the mineralextracted from well 112, to determine an accurate settlement. Theprovisions in documents 102 that govern well 112 can also influenceand/or dictate the type of valuation system 100 uses to determine theestimated market value for the mineral extracted from well 112.

As described above, system 100 uses the received and/or stored data todetermine accurate settlements. System 100 periodically calculates andpresents settlements for each ownership interest. System 100 presentsbills to “due from” parties 114 and detailed financial statements to“due to” parties 116 based on settlement amounts. Parties 114 and 116may use an electronic network (not shown) to access system 100 with acomputing device to review settlement, information including financialagreements and facility data, as well as to request changes and/orapprove amounts. Party 116 can also elect a future share of minerals forsale through an independent marketing program. The parties may also usea centralized call center (not shown) for personalized assistance. Ifparty 114 approves the settlement, system 100 transfers funds over anelectronic network 118 between financial accounts associated with the“due from” parties 114 and “due to” parties 116 (e.g. using commercialbanking institutions 120).

FIG. 2 shows a block diagram of an embodiment of electronic settlementsystem 100′ in more detail. System 100′ includes a document managementmodule 200, a volume capture and confirmation module 202, a marketmonitoring module 204, a valuation module 206, a billing and transactionclearing module 208, and a storage module 210. As illustrated, module200 employs process 300 and module 206 employs process 400, bothdescribed in more detail below.

Document management module 200 collects information from sourcedocuments and related information regarding leases, deeds, contracts andall other agreements that govern the ownership of, and the rights andobligations associated with a well, for example well 112 (FIG. 1) andthe minerals extracted from that well. The source documents and relatedinformation may refer to several different parties, and may contain orrefer to geospatial data associated with one or more wells. Thegeospatial data can be described using various techniques, such as metes& bounds or polygons.

Instead of relying on a single document (such as a division order) todetermine the rights and responsibilities of various parties associatedwith a well, module 200 gathers many types of source documents fromvarious sources. The use of many types of source documents increases theaccuracy of the settlement process. For example, the source documentsand related information can include lease agreements, deeds,recordations, probates, joint operating agreements, farmout agreements,division orders, assignments, conveyances, gas balancing agreements,pooling agreements, unitization and communitization agreements, stateand federal regulations and regulatory filings, sales contracts,drilling reports, well completion reports, pipeline tie-in reports,maps, field plats, latitudes, longitudes, map polygons, depths,formations, meter proving reports, field schematics, gathering systemschematics, gathering agreements, processing agreements, storageagreements, and/or transportation agreements.

Module 200 stores information summarizing rights and responsibilitiescontained in each of the documents. Such information can include, forexample, the involved parties such as owners and operators along withnames, addresses, and other identifiers for the involved parties. Theinformation can also include contractual terms, such as royalty rates,the cost and profit distributions among parties, the party responsiblefor making payments, the frequency of settlement, any required valuationtechniques, and the like. The information can also include associatedgeospatial data used to identify a well or wells. Module 200 acquiresthis information from the documents using both manual and electronicmethods, such as keypunching and optical character recognition, andstores the information in the storage module 210. In addition to thisinformation, module 200 electronically stores a full copy of each of thedocuments. Storage module 210 can be, for example, a central, integrateddatabase, capable of linking data by means of identifiers and geospatial data. The stored information can be in a form (e.g. ASCII text)in which it can be searched and manipulated automatically by a computerprogram. Module 200 can also use a land information system (not shown)to manage the captured data. One such land information system is TobinLandSuite™, manufactured by Tobin International, Ltd of Abilene, Tex.,which can integrate textual and spatial land and ownership data withother related data such as oil/gas exploration and productioninformation.

Module 200 automatically reconciles the source documents and relatedinformation periodically, for example, each month, using automatedsystem business rules, identifiers, and cross-references, and geospatialdata. The objective of this reconciliation includes determining thecorrect ownership of the extracted minerals, and determining the rightsand obligations of all parties involved in the extraction, consumption,gathering, processing, storage, transportation, pricing, selling,invoicing, paying and accounting for the extracted minerals. Module 200analyzes the information in the storage module 210 to produce a list ofall parties, with a description of their ownership interest in theminerals from each well, if any, and their associated rights andobligations.

FIG. 3 shows a flowchart for an exemplary process 300 that module 200uses to make such an analysis. Process 300 determines 302 the rights andobligations associated with each well. To make this determination,process 300 cross-references geospatial data associated with the sourcedocuments with geospatial descriptions of each well to determine a totalor partial intersection. Module 200 can store the geospatial dataassociated with the documents and the geospatial description of eachwell, for example, as database entries in storage module 210, so thatprocess 300 can make an automated comparison. The geospatial dataassociated with the documents and the geospatial description of eachwell can be in different formats. For example, the geospatial dataassociated with the documents can be represented by a polygon, while thegeospatial description of a well can be represented by longitude andlatitude coordinates. Process 300 can determine the intersection on botha 2-dimensional and a 3-dimensional basis, to resolve both aerial andsubsurface rights and obligations. Based on the total or partialintersection, process 300 produces a list of rights and obligations ofvarious parties associated with that well.

Process 300 determines 304, which rights and obligations take precedenceover others, using business rules and heuristics that are based onstate, federal, and Indian government regulations, court rulings,prevailing case law, and most predominant industry practice in a givengeographic area. For example, typewritten or handwritten provisionscontrol over printed form provisions. Explicit or implicit terms of anygiven agreement may indicate which rights and obligations supersedeothers. In some cases there may be conflicts among different agreements.Process 300 determines 306 whether there are any rights and obligationsthat are ambiguous or in conflict with each other. If so, process 300generates 308 warnings or alerts indicating the conflicts, thenautomatically resolves 310 the conflicts based on a heuristic process.For example, an automated conflict resolution rule can be thatagreements with later dates supersede agreements with earlier dates.Other conflict resolution rules can be based on current legal precedentfor the applicable jurisdiction. If necessary, process 300 prompts anadministrator for further information to reconcile conflicting rightsand obligations. Process 300 also generates automatic warnings andalerts to indicate the absence of data, pending expiration ofagreements, or inconsistencies across source documents and relatedinformation. Process 300 then generates 312 a list of parties, with adescription of their ownership interest in the minerals extracted fromeach well, if any, and their associated rights and obligations. Thislist is also stored in the storage module 210.

Referring back to FIG. 2, volume capture and confirmation module 202collects and stores data describing the periodic (e.g. monthly)extraction of oil, natural gas, and related products such as liquid orgas volumes. As described above, sources of this data can vary andinclude, for example, meter readings, operator and transporterstatements (e.g., invoices, bills, sales receipts). Module 202 can usevarious kinds of telemetry to obtain measurements, such as wired orwireless communication with different meters. Module 202 can also usemethods of acquiring the data from documentation similar to the manualand electronic methods used by document management module 200, describedabove.

Module 202 reconciles this volume data periodically using an automatedsystem of business rules, identifiers, and cross-references, engineeringformulas, and balancing formulas. For example, module 202 can use thevolume of the mineral extracted from the well as long as no othermeasurements vary from the well measurement by more than an acceptabletolerance, such as 2%. Other automatic resolution rules include, forexample, taking a weighted average of conflicting volume amounts wherethe weights are estimated confidence levels or using some of thebalancing techniques described below.

Objectives of this reconciliation include determining accurate estimatesof the actual volumes of oil, natural gas, and related productsextracted, processed, stored, transported, and sold in a given period(e.g. one month). More accurate estimates are obtained by comparingmultiple sources of data with one another and resolving discrepanciesbetween the sources if discrepancies exist. Module 202 adjusts eachvalue prior to comparison using standard engineering formulas andconversion factors to establish a common basis for comparison. Forexample, for natural gas, all data may be converted to units of 1000cubic feet (“MCFs”). Module 202 also corrects for temperature, pressure,and other operating conditions before comparison.

Module 202 uses one or more balancing methods for the purpose ofdetermining measurement errors, allocation errors, omissions, orinconsistencies. One type of balancing method is liquid, gas, and solidvolume balancing. Another type of balancing method is mass and heatingcontent balancing. Liquid, gas, and solid volume balancing comparesmultiple sources of volumes, measured in barrels, gallons, or othercustomary units. Mass and heating content balancing compares multiplesources of mass and heating content, measured in customary units ofmeasure for mass, chemical composition, and heating content. For eithermethod, the comparison may be done individually or in aggregate,depending on the delivery system and the nature of each measurement. Forexample, module 202 can determine volumes using observed pressure andtemperature data, using observed and gauged liquid levels andtemperature and combining these with certified tank strapping data,and/or using certified lab tests of gas composition and water todetermine heating content (e.g., MMBTU).

The results of reconciliation using these balancing methods include alist of producing wells, along with the actual volumes, measured and/orcalculated, of oil, natural gas, and related products extracted and soldfor each well in a given period. Module 202 stores the collected dataand these results in the storage module 210. There are also a series ofautomatic warnings and alerts indicating the absence of data,conflicting or inconsistent volumes, and other inconsistencies andimbalances.

Market monitoring module 204 collects and stores prices, fees, costs andother market price data related to the gathering, processing, storage,transportation and sale of oil, natural gas and related products such asspot prices, index prices, and include allowances for shrinkage andloss. This data can be captured and recorded on a daily basis frompublic and private sources, such as a real-time feed of data fromexchanges (e.g., New York Mercantile Exchange), actual sales prices,regulatory filings, published data and private contracts. For each ofthe minerals extracted from a well, it is advantageous for at least oneof the sources of price per unit volume to be from an independentsource. That is, the independent entity has no relationship to theownership interests or parties with rights and responsibilitiesassociated with the well. Similarly, it is advantageous for no singleentity to control the price data. When module 204 receives price datafrom various market centers, module 204 also records and/or determinestransportation charges with respect to transportation routes from thevicinity of each well to various market centers, which, as describedbelow, can be used in an estimated market valuation at the well. Module204 stores collected data in storage module 210 in a format such as anintegrated database to support statistical analysis.

Valuation module 206 determines an estimated market value associatedwith each well. Periodically (e.g. monthly) module 206 analyzes the datacollected by the other modules (e.g., the market monitoring module 204and from volume capture and confirmation module 202) to determine, withreasonable confidence, local prices at each well for the extractedminerals. The estimated market value of products from a well arefunctions of prices for which the mineral is sold, as well as associatedfees, costs, and other charges, taking into account compliance with allregulations and the associated rights and obligations as determined inprocess 300.

FIG. 4 illustrates a flowchart of a process 400 to compute the estimatedmarket value for the minerals extracted at each well. Process 400determines 402 the prevailing market centers serving each well, anddetermines 404 the general pattern of product flow to each market centerover the transportation routes from the vicinity of each well to eachmarket center. In order to find an estimated market value at the well,process 400 uses, local cost data (e.g., transportation costs from thevicinity of the well to market centers), global price data (e.g. anindex price associated with the market centers), and the determinedpattern of product flow (e.g., which percentage of minerals travel towhich market centers). If necessary, process 400 performs a statisticalinterpolation 406 of such local cost data and global price dataresulting in an estimated market value for each producing well, per unitvolume of production, based on the determined pattern of flow. Thestatistical interpolation accounts for the variability in the data,which can be characterized by minimum, maximum, average, and standarddeviation statistics along with the sampling error and observation errorfor each data item. An estimated probability density function may beused in the statistical interpolation. The estimated market value issufficiently detailed to include taxes, royalties and settlement valuesfor a wide variety of lease and agreement provisions, including: highestprice in the area, most favored nations clauses, major portions pricing,best commercially available price, and fair market value at thewellhead.

Referring back to FIG. 2, billing and transaction clearing module 208calculates monthly settlements, using information from storage module210 including: ownership information from document management module200, volume estimates from volume capture and confirmation module 202,estimated market values from the valuation module 206, and the rightsand obligations of each party from the document management module 200.Settlement, due to minerals extracted from a well, can result inmonetary transactions between parties, where an amount is owed from a“due from” party to a “due to” party. For example, the amount owed couldbe based on a royalty rate, a lease term, a farm-out term, or a taxregulation. The result of the settlement calculations performed bymodule 208 is a list of settlements, where each settlement contains forexample, the quantities of the mineral(s) to be settled, the values ofthe mineral(s), including costs, fees, taxes and other charges, and theparties involved in the settlement, including the “due to” and “duefrom” parties.

Module 208 prepares a detailed bill for each “due from” party and makesit available, for example, as a secure web page. An email message issent to a “due from” party notifying them of pending settlements andcorresponding due dates. The email includes a hyperlink to the secureweb page that contain the detailed bill. The “due from” party is enabledto access and inspect the bill and indicate (e.g. using a graphical userinterface), for each settlement, whether to approve as-is, approve withchanges made using the secure web page, hold for further analysis, orhold and generate minimum, shut-in, estimated, or other type of paymentfor the purpose of maintaining the lease. If a settlement is approvedwithout changes the “due from” party can be indemnified against anyliability to the “due to” party.

Module 208 prepares a detailed statement for each “due to” party, whichis also made available as a secure web page. Paper-based statements canbe prepared for those parties who request them. An email message is sentto each “due to” party, notifying them of settlements that have beenprocessed. The email includes a hyperlink to the secure web page thatcontain the detailed statements. The “due to” party is enabled to accesstheir detailed statement describing each individual settlement item.Module 208 also prepares federal and state regulatory filings for eachsettlement, including for example, government royalty reports, severancetax reports, non-resident alien withholding reports, and annual 1099'sfor any party receiving over the trigger amount for the year.

Module 208 also provides both “due from” and “due to” parties withadditional services such as online “drill-down.” For online,“drill-down”, each electronic bill and electronic statement includessecure hyperlinks that allow each party to “drill down” and review thedetails that comprise each settlement. Each “drill down” representsadditional, secure web pages that include various data. Some pagesinclude data associated with wells such as: scanned images of leases andother agreements, schematic diagrams of wells, equipment, andmeasurement points, diagrams depicting general product flow, mapsdepicting well sites, horizontal well courses, pipeline courses,reservoir boundaries, subsurface depth indications, and polygonsrepresenting the acreage stipulated by each lease or other agreement.Some pages include graphs and charts depicting historical trends ofprices, volumes, and any factor used in calculating settlements such ashistograms and other statistical charts illustrating the determinationof estimated market values. Web pages also provide text-based reportslisting selected components of any settlement calculation.

Customer service is available by both online support and by acentralized call center. The online support makes information availablesuch as answers to frequently asked questions regarding settlementcalculations and display analyst comments and remarks. Online submissionof questions is also made available to enable follow-up via email. Acentralized call center with toll-free telephone access is available,during extended business hours, to provide immediate and personalizedassistance to any party involved in settlements.

Another feature provided by billing and transaction clearing module 208allows owner marketing elections to be made via the Internet, allowingroyalty and other interest owners to dedicate their share of minerals toindependent marketing programs. Using ownership and rights andobligations information from document management module 200 and futuremarket values computed in valuation module 206, module 208 provides eachroyalty and other interest owner with their marketing rights andobligations with respect to their share of minerals. These marketingrights and obligations include the share that is available fordedication, an estimate of production volumes in future months, anestimate of future market values of these volumes, and a choice of oneor several independent marketing programs through which that owner mayindependently sell its share of production.

Module 208 provides a secure web page that allows each owner to make anelection to dedicate their share of minerals for a specified futureperiod of time to an independent marketing program of their choosing.The volumes and values for future minerals are based on estimates at thetime of the marketing election. Then for each actual sale made under anindependent marketing program, the actual volumes and values comprisingeach sale are determined, and settlements are automatically generatedbetween the owners and the corresponding buyers of their products. Theownership shares of minerals for several parties can also be aggregatedto generate a collective share that can then be sold through anindependent marketing program. The monetary compensation to each partyis then based on the sale price of the collective share.

To aid in describing the modules of system 100′, FIG. 5 illustrates aspecific example 500 of system 100′ in operation. In example 500, module200 collects three agreements with respect to a well 502. One agreementis a lease agreement 504 associated with well 502 between a company 514,who is the lessee, and an individual landowner 512, who is the lessor.The agreement states that landowner 512 is to receive a 20% royalty,valued at the highest price in the area. Another agreement is aconveyance 506 that assigns the lease to company 510, transferring theobligation for royalty payments from company 514 to company 510. Anotheragreement is a joint operating agreement 508 between company 510 andcompany 516 to split all revenues and costs (including royalty paymentsto owner 512) associated with well 502 by 50%.

The list of parties with ownership interest would include company 510,company 516, and landowner 512. The rights and obligations are thefollowing. Company 510 and company 516 share equal portions of revenuesdue to sale of crude oil (sold to company A) and natural gas (sold tocompany B), and they also share equal obligation to pay royalties tolandowner 512 from the oil and natural gas produced by well 502.Landowner 512 has a right to 20% of the value of the minerals (i.e., oiland gas) at the highest price in the area.

For the first month, company 510 and company 516, as operators of well502, report the extracted volumes as 100 barrels of crude oil and 200MCF of natural gas from readings taken at meters 518 that measure theflow of minerals from well 502 to processing facilities 520 and 522. Thepurchasers of the minerals also report volumes, using transportationstatements 524. Operators 510 and 516 send the crude oil throughfacility 520, which is associated with company A, and the natural gasthrough facility 522, which is associated with company B. Company Areports the volume of crude oil received as 101 barrels. Company Breports the volume of natural gas received as 200 MCF. Module 202determines that 200 MCF of natural gas is produced by well 502 in thefirst month because both sources report the same volume and there is nodiscrepancy. There is, however, a discrepancy in the amount of crude oilreported. In this case, module 202 resolves this discrepancy by takingthe amount reported by the operators, 100 barrels of crude oil, ascorrect by default, since it agrees with the amount reported by companyA to within a predefined tolerance (e.g. 2%).

Module 204 stores prices for crude oil and natural gas for the firstmonth. For the crude oil, one source associated with the area of thewell has a price of $20/barrel, and another source also associated withthe area of the well has a price of $25/barrel. For natural gas, module204 records only one source with a price of $3/MCF. The source providingthis price is associated with a market center C (not shown) that isremote from the area of the well (e.g. 100 miles away) and isindependent from parties 510, 512, 514, and 516. Module 204 also storestransportation prices based on transportation contracts with company Aand company B. Company A has a contract 526 to transport crude oil at$2/barrel to market center C, and company B has a contract 528 totransport natural gas at $0.5/MCF to the market center C.

Module 206 determines the values for crude oil and natural gas for thefirst month using the calculations that follow. For crude oil, since thelease provision indicates that the highest price in the area is to beused, module 206 uses a value of $25/barrel, since both prices areassociated with the area and $25/barrel is the highest. For natural gas,since there is no local price, the value is determined based on theprice ($3/MCF) at the market center C taking into account transportationcosts ($0.5/MCF) from the vicinity of the well to the market center C.The resulting estimated market value for natural gas at the well is$2.5/MCF (i.e., $3/MCF−$0.5/MCF). If neither or only one oil price wasassociated with the area of the well, module 206 can use a similarcalculation (e.g., market price minus transportation costs) to determinean oil price associated with the area of the well.

Module 208 calculates a settlement between company 510 and landowner 512for the first month due to products extracted from well 502 as follows.The volume of crude oil to be settled is 100 barrels. The volume ofnatural gas to be settled is 200 MCF. The value of the crude oil is$2500 (i.e., 100 barrels×$25/barrel). The value of the natural gas is$500 (i.e., 200 MCF×$2.50/MCF). The royalty payment that company 510owes to landowner 512 is based on 50% of the value of the products(company 516 owes the other 50%) at a 20% royalty rate. This results inpayments due from company 510 to landowner 512 of $250 (i.e.,$2500×50%×20%) for the crude oil and $50 (i.e., $500×50%×20%) for thenatural gas.

Upon approval, module 208 transfers funds via an electronic network 530from the “due from” party's designated bank account into the “due to”party's designated bank account. A commercial banking institution can beused to execute these transfers. In example 500, module 208 transfersover network 530 a total amount of $300 (i.e., $250+$50) from company510 to landowner 512 for the crude oil and natural gas products removedfrom well 502 in the first month.

A number of embodiments of the invention have been described herein.Nevertheless, it will be understood that various modifications may bemade without departing from the spirit and scope of the invention. Somealternatives follow that illustrate, but in no way limit, some possiblealternatives to the examples described above. For example: for manualand electronic methods for acquiring data: scanning, photocopying,faxing, map identification and plotting, electronic data interchange,transcription, and internet data capture and the like can by used; forgeospatial data or a geospatial description of a well: state, county,section, township, range, meridian, polylines, latitude, longitude,depth coordinates, depth ranges, perforation intervals, formationdescriptions and the like can be used; involved parties include:gatherers, processors, transporters, purchasers, trustees, agents,traders, customers, and the like; sources of data describing theperiodic extraction of oil, natural gas and related products include:run tickets, tank gauge reports, well allocation reports, gatheringstatements, shipper statements, storage statements, processingstatements, imbalance statements, well status and downtime reports,equipment specifications, laboratory reports, well tests, and the like;prices, fees, costs and other market data related to the gathering,processing, storage, transportation and sale of oil, natural gas andrelated products include: futures prices, option prices, contractprices, indices, posted prices, regulated prices, FERC tariffs,gathering charges, marketing fees, processing fees, storage fees,transportation charges, exchange differentials, gravity and qualitydifferentials, and the like; data collected from the above sourcesinclude: dates and times, opening and closing tank levels, pressures,temperatures, liquid gravity or density, hydrocarbon mole percents, gasheating content, water content, sulfur content, CO2 content, heliumcontent, and operating characteristics of equipment, and the like.Although the term electronic network is used above, any communicationsnetwork can be used. For example, the network can include electrical,optical, wired, wireless, LAN, WAN, intranet, Internet, telephone, andcable communication channels.

1. A petroleum or gas distribution processing system comprising: atleast one non-transitory computer readable storage medium encoded withexecutable instructions; and at least one processor that is configuredto, upon execution of the executable instructions, perform operationscomprising: storing, in electronic storage, quantity data defining aquantity of petroleum or gas included in a petroleum or gas distributionassociated with a well; accessing, from sources including an independentsource that is not involved in the petroleum or gas distribution, pricedata associated with the petroleum or gas included in the petroleum orgas distribution; storing, in the electronic storage, the price dataassociated with the petroleum or gas included in the petroleum or gasdistribution; producing a list of rights and obligations of variousparties associated with the well based on information from sourcedocuments that govern ownership of the well; after producing the list ofrights and obligations, determining, based on at least one rule, whichof the rights and obligations included in the list take precedence overothers; after determining which of the rights and obligations includedin the list take precedence over others, determining whether any of therights and obligations included in the list are in conflict with eachother; based on a determination that at least one conflict exists in therights and obligations included in the list: generating an alertindicating the at least one conflict, and automatically reconciling theat least one conflict based on a heuristic process that uses one or moreof a conflict resolution rule that agreements with later dates supersedeagreements with earlier dates and a conflict resolution rule thatreflects current legal precedent for the applicable jurisdiction;storing, in the electronic storage, reconciled rights data that reflectsthe rights and obligations associated with the well after automaticreconciliation of the at least one conflict; and generating a settlementfor the petroleum or gas distribution using the quantity data, the pricedata, and the reconciled rights data.
 2. The petroleum or gasdistribution processing system of claim 1, wherein accessing and storingthe price data comprises: receiving global price data associated withthe petroleum or gas included in the petroleum or gas distribution;receiving local cost data associated with the petroleum or gas includedin the petroleum or gas distribution; determining a correspondencebetween the global price data and a well from which the petroleum or gasincluded in the petroleum or gas distribution was extracted; anddetermining a local price associated with the well from which thepetroleum or gas included in the petroleum or gas distribution wasextracted using the global price data, the local cost data, and thedetermined correspondence.
 3. The petroleum or gas distributionprocessing system of claim 2, wherein: receiving global price datacomprises receiving price data from market centers; determining thecorrespondence comprises determining a statistical pattern of flow ofpetroleum or gas extracted from the well to each of the market centers;receiving the local cost data comprises receiving respectivetransportation costs from the well to each of the market centers; anddetermining the local price associated with the well from which thepetroleum or gas included in the petroleum or gas distribution wasextracted using the global price data, the local cost data, and thedetermined correspondence comprises determining the local price usingthe price data from market centers, the statistical pattern of flow ofpetroleum or gas extracted from the well to each of the market centers,and the respective transportation costs from the well to each of themarket centers.
 4. The petroleum or gas distribution processing systemof claim 2, wherein: receiving global price data comprises receiving apublished price from a New York mercantile exchange, an index price, andan actual sell price from an independent entity; receiving the localcost data comprises receiving gathering costs, transportation costs,values of shrinkage, and prevailing transportation and gathering routes;and determining the local price associated with the well from which thepetroleum or gas included in the petroleum or gas distribution wasextracted using the global price data, the local cost data, and thedetermined correspondence comprises determining the local price usingthe published price from the New York mercantile exchange, the indexprice, the actual sell price from the independent entity, the gatheringcosts, the transportation costs, the values of shrinkage, and theprevailing transportation and gathering routes.
 5. The petroleum or gasdistribution processing system of claim 2, wherein determining the localprice associated with the well from which the petroleum or gas includedin the petroleum or gas distribution was extracted using the globalprice data, the local cost data, and the determined correspondencecomprises determining a monetary value using a technique comprising atleast one of a fair market value technique, a gross proceeds technique,a highest price in an area technique, a most favored nation technique, amajor portions technique, and a technique compliant to a governmentregulation or a contract term.
 6. The petroleum or gas distributionprocessing system of claim 2, wherein receiving global price datacomprises selecting monitoring points providing the global price data,each monitoring point providing a respective price per quantity of thepetroleum or gas and at least one monitoring point corresponding to anindependent entity that is not involved in the petroleum or gasdistribution.
 7. The petroleum or gas distribution processing system ofclaim 2, wherein selecting monitoring points providing the global pricedata comprises selecting monitoring points such that no single entitycontrols the global price data.
 8. The petroleum or gas distributionprocessing system of claim 2, wherein determining the local priceassociated with the well from which the petroleum or gas included in thepetroleum or gas distribution was extracted using the global price data,the local cost data, and the determined correspondence comprisesgenerating an estimated probability density function associated with thelocal price.
 9. A non-transitory computer readable storage mediumencoded with a computer program product, the computer program productcomprising instructions that, when executed, operate to cause a computerto perform operations comprising: storing, in electronic storage,quantity data defining a quantity of petroleum or gas included in apetroleum or gas distribution associated with a well; accessing, fromsources including an independent source that is not involved in thepetroleum or gas distribution, price data associated with the petroleumor gas included in the petroleum or gas distribution; storing, in theelectronic storage, the price data associated with the petroleum or gasincluded in the petroleum or gas distribution; producing a list ofrights and obligations of various parties associated with the well basedon information from source documents that govern ownership of the well;after producing the list of rights and obligations, determining, basedon at least one rule, which of the rights and obligations included inthe list take precedence over others; after determining which of therights and obligations included in the list take precedence over others,determining whether any of the rights and obligations included in thelist are in conflict with each other; based on a determination that atleast one conflict exists in the rights and obligations included in thelist: generating an alert indicating the at least one conflict, andautomatically reconciling the at least one conflict based on a heuristicprocess that uses one or more of a conflict resolution rule thatagreements with later dates supersede agreements with earlier dates anda conflict resolution rule that reflects current legal precedent for theapplicable jurisdiction; storing, in the electronic storage, reconciledrights data that reflects the rights and obligations associated with thewell after automatic reconciliation of the at least one conflict; andgenerating a settlement for the petroleum or gas distribution using thequantity data, the price data, and the reconciled rights data.
 10. Amethod comprising: storing, in electronic storage, quantity datadefining a quantity of petroleum or gas included in a petroleum or gasdistribution associated with a well; accessing, from sources includingan independent source that is not involved in the petroleum or gasdistribution, price data associated with the petroleum or gas includedin the petroleum or gas distribution; storing, in the electronicstorage, the price data associated with the petroleum or gas included inthe petroleum or gas distribution; producing a list of rights andobligations of various parties associated with the well based oninformation from source documents that govern ownership of the well;after producing the list of rights and obligations, determining, basedon at least one rule, which of the rights and obligations included inthe list take precedence over others; after determining which of therights and obligations included in the list take precedence over others,determining whether any of the rights and obligations included in thelist are in conflict with each other; based on a determination that atleast one conflict exists in the rights and obligations included in thelist: generating an alert indicating the at least one conflict, andautomatically reconciling, by at least one processor, the at least oneconflict based on a heuristic process that uses one or more of aconflict resolution rule that agreements with later dates supersedeagreements with earlier dates and a conflict resolution rule thatreflects current legal precedent for the applicable jurisdiction;storing, in the electronic storage, reconciled rights data that reflectsthe rights and obligations associated with the well after automaticreconciliation of the at least one conflict; and generating, by at leastone processor, a settlement for the petroleum or gas distribution usingthe quantity data, the price data, and the reconciled rights data. 11.The petroleum or gas distribution processing system of claim 1, whereinproducing a list of rights and obligations of various parties associatedwith the well based on information from source documents that governownership of the well comprises: automatically reconciling the sourcedocuments that govern ownership of the well periodically using automatedsystem business rules, identifiers, cross-references, and geospatialdata, the automatic reconciliation including: determining correctownership of petroleum or gas extracted from the well, determiningrights and obligations of all parties involved in extraction,consumption, gathering, processing, storage, transportation, pricing,selling, invoicing, paying, and accounting for petroleum or gasextracted from the well, and producing a list of all parties with adescription of their ownership interest in petroleum or gas extractedfrom the well and their associated rights and obligations.
 12. Thepetroleum or gas distribution processing system of claim 1, whereinproducing a list of rights and obligations of various parties associatedwith the well based on information from source documents that governownership of the well comprises: accessing, from a database, geospatialdata associated with the source documents that govern ownership of thewell and a geospatial description of the well; comparing the geospatialdata associated with the source documents with the geospatialdescription of the well; determining a total or partial intersectionbased on the comparison of the geospatial data associated with thesource documents with the geospatial description of the well; and basedon the total or partial intersection, producing a list of rights andobligations of various parties associated with the well.
 13. Thepetroleum or gas distribution processing system of claim 12: whereinaccessing, from the database, geospatial data associated with the sourcedocuments that govern ownership of the well and the geospatialdescription of the well comprises accessing geospatial data associatedwith the source documents represented as at least one polygon andaccessing a geospatial description of the well represented as longitudeand latitude coordinates; and wherein determining the total or partialintersection based on the comparison of the geospatial data associatedwith the source documents with the geospatial description of the wellcomprises determining the total or partial intersection on both atwo-dimensional and a three-dimensional basis to resolve both aerial andsubsurface rights and obligations.
 14. The petroleum or gas distributionprocessing system of claim 1, wherein determining, based on at least onerule, which of the rights and obligations included in the list takeprecedence over others comprises determining which of the rights andobligations included in the list take precedence over others using rulesand heuristics that are based on state, federal, and Indian governmentregulations, court rulings, prevailing case law, and most predominantindustry practice in a given geographic area.
 15. The petroleum or gasdistribution processing system of claim 1, wherein determining, based onat least one rule, which of the rights and obligations included in thelist take precedence over others comprises determining that rights andobligations defined by typewritten or handwritten provisions controlover rights and obligations defined by printed form provisions anddetermining precedence based on terms of any given agreement thatindicate which rights and obligations supersede others.
 16. Thepetroleum or gas distribution processing system of claim 1, wherein theoperations further comprise prompting an administrator for furtherinformation to reconcile conflicting rights and obligations.
 17. Thepetroleum or gas distribution processing system of claim 1, whereingenerating the alert indicating the at least one conflict comprisesgenerating alerts to indicate absence of data, pending expiration ofagreements, and inconsistencies across source documents and relatedinformation.
 18. The petroleum or gas distribution processing system ofclaim 1, wherein automatically reconciling the at least one conflictbased on a heuristic process that uses one or more of a conflictresolution rule that agreements with later dates supersede agreementswith earlier dates and a conflict resolution rule that reflects currentlegal precedent for the applicable jurisdiction comprises automaticallyreconciling the at least one conflict based on a heuristic process thatuses a conflict resolution rule that agreements with later datessupersede agreements with earlier dates.
 19. The petroleum or gasdistribution processing system of claim 1, wherein automaticallyreconciling the at least one conflict based on a heuristic process thatuses one or more of a conflict resolution rule that agreements withlater dates supersede agreements with earlier dates and a conflictresolution rule that reflects current legal precedent for the applicablejurisdiction comprises automatically reconciling the at least oneconflict based on a heuristic process that uses a conflict resolutionrule that reflects current legal precedent for the applicablejurisdiction.
 20. The petroleum or gas distribution processing system ofclaim 1, wherein automatically reconciling the at least one conflictbased on a heuristic process that uses one or more of a conflictresolution rule that agreements with later dates supersede agreementswith earlier dates and a conflict resolution rule that reflects currentlegal precedent for the applicable jurisdiction comprises automaticallyreconciling the at least one conflict based on a heuristic process thatuses a conflict resolution rule that agreements with later datessupersede agreements with earlier dates and a conflict resolution rulethat reflects current legal precedent for the applicable jurisdiction.